Comparing Professions in UK and German-Speaking Management Accounting

This paper studies professional education in management accounting and the ways in which management accounting professions establish jurisdictional claims about management accounting work in the UK and German-speaking countries, respectively. We adopt a comparative approach drawing on the framework of systems of professions and the distinction between public, legal and workplace jurisdiction [Abbott, A. (1988 Abbott, A. (1988). The system of professions: An essay on the division of expert labor. Chicago, IL: University of Chicago Press.[Crossref] , [Google Scholar]). The system of professions: An essay on the division of expert labor. Chicago, IL: University of Chicago Press]. Our findings highlight some notable differences between the UK and German-speaking countries with respect to professional management accounting education, the jurisdictional claims that the professions make as well as the establishment and history of professional institutes for management accounting. Based on this analysis, the paper identifies a dilemma or at least a challenge for policy-makers with respect to balancing the need for a context-dependent model of professional education with a need for comparability and convergence.     

Inclusion, exclusion and control: The case of the Kenyan accounting professionalisation project

This study explores the concept of closure within professional projects and its application to the development of the accounting profession in Kenya, an ex-British colony. It draws on oral history techniques and archival research to examine the construction of the institutional arrangements for accountancy, from 1970 to 1978, within a political, social and historical context. Responding to calls for a more nuanced theorisation of Weberian closure [Chua, W., & Poullaos, C. (1993). Rethinking the profession-state dynamic: The Victorian chartered attempt. Accounting, Organisations and Society, 18(7/8), 691–782; Chua, W., & Poullaos, C. (1998). The dynamics of ‘closure’ amidst the construction of market, profession, empire and nationhood: An historical analysis of an Australian accounting association, 1886–1903. Accounting, Organisations and Society, 23(2), 155–187], the Kenyan case is used to illustrate that not all professionalisation projects are simply the pursuit of monopolistic control driven by collective social mobility. The inclusion of all qualified accountants rather than exclusion was, in this instance, vital in order to ensure that a viable association was formed amidst existing neo-colonial societal divisions along racial lines and the demands of the newly-formed State. The evidence presented shows how different strategies were adopted by different interest groups at different stages of the project.     

Claiming a jurisdiction for the “Public Accountant” in England prior to organisational fusion

This paper exploits the interpretive content of city-based directories to demonstrate the emergence of “public accountants” as a professional grouping in England during the period 1800–1880, and it applies Andrew Abbott’s The System of the Professions (1988) to explain the broader significance of that finding. We reveal that, by the 1870s, “public accountants” in England had achieved public recognition as expert suppliers of services over which they possessed an effective jurisdiction, and we conclude that Abbott’s theory provides a meaningful framework for explaining the history of public accounting prior to organisational fusion in 1880. We also consider why the label “public accountant” failed to satisfy the conditions identified by Abbott’s analytical framework for the continuing success of their professional project, and conclude that the need for a more effective means of occupational differentiation led to the reconstruction of a public accountancy profession based instead on the title “chartered accountant”.     

The advantages of separateness explaining the unusual profession-university link in English Chartered Accountancy

Within the sociology of the professions, the link between the professions and the universities has come to be seen as natural and ineluctable because of their common association with knowledge [Abbott A. The System of Professions, University of Chicago Press, Chicago, IL; 1988]. There is a consensus in the literature that the link brings all round benefit to a professional occupation and that the active pursuit of such a link is an important component of the professionalization process. England's largest and most prestigious accountancy body – the Institute of Chartered Accountants in England and Wales – however stands out as an empirical anomaly in that it has not developed its training, education or certification within the university sector. In this paper we suggest that, although not fulfilling many of the roles traditionally attributed to the university in professional life, the university in general and academic departments of accounting in particular have played a number of crucial roles in establishing and reinforcing the high status of ICAEW members. This unique and arguably anomalous relationship, we argue, has contributed to the success of ICAEW members when competing with related and rival occupational groups both for jurisdictions and for new recruits. In turn, accounting academia in England has derived a number of unique benefits.     

The re-emergence of the public accounting profession in China: A hegemonic analysis

This paper draws on Gramsci's concept of hegemony to examine and explain the circumstances leading to the re-emergence of the public accounting profession in China in the early 1980s. In particular, the paper attempts to understand the political and ideological influence upon the professionalisation process of the Chinese accountants. The paper not only highlights a major difference between the professionalisation process of the public accounting profession in China as compared to the West, but also the authoritative and dominant role assumed by the Chinese state in the whole societal set-up. Through effectively exercising its political and ideological leadership, the state successfully mobilised the Chinese accountants in the implementation of its economic-related agenda. The paper demonstrates that the state has clearly achieved hegemony within the accounting community, and further suggests that the state-accounting profession relationship could be likened to the father–son relationship as encompassed within the Confucian notion of wu lun.     

Foresight and long-term policy-making: An analysis of anticipatory boundary work in policy organizations in The Netherlands

Public policy is founded on analysis and knowledge. However, knowledge – and especially knowledge about the future – is not a self-evident element of public policy-making. This paper conceptualizes the problematic relationship between anticipatory policy-making and anticipatory knowledge. Our study identifies possible key-variables in the linkage between foresight and policy, such as positioning, timing interfaces, professional background, instrument usage, procedures and leadership. We describe the organization and flow of policy and futures knowledge. Furthermore, we generalize these findings toward a theory concluding how ‘goodness of fit’ between knowledge about the future and policy can be achieved, so that the likelihood of informed future-oriented policies might increase.     

A nuanced perspective on episteme and techne in finance

The debates on the Black and Scholes model shed light on the distinction between practices (i.e. inductive know-how or techne) and theory (i.e. deductive know-why or episteme) in finance. We revisit the classical distinction, still accepted widely in the literature, between episteme and techne and develop a nuanced view by introducing two other levels of knowledge we will call “commanding knowledge” (epitaktike) and “practical wisdom” (phronesis). The major contribution of this paper is to use these four levels of knowledge (episteme, epitaktike, techne and phronesis) in order to highlight how this model subtly influenced financial practices by shaping the microstructure of the emerging Chicago Board Options Exchange (CBOE). Our analysis will then be completed by a re-interpretation of the existing literature about the performativity of the BSM model to show how these levels of knowledge combined each other in the evolution post-crash (1987) financial practices.     

The future of Islam after 9/11

This article projects the possible future of Islam in Iran, Egypt, Jordan, and beyond, by analyzing the historical background and extrapolating from survey data collected before and after 11 September 2001. Islamic culture is actively produced, rather than being an inevitable reflection of social arrangements, so it is important to understand how its intellectual leaders and activists perceive and resolve the issues facing their faith. The key concepts are targets, in relation to which ideas are produced, and societal visibility. If these targets are visible and clear, then one may be able to reasonably estimate the kind of religious discourses most likely to develop in the Islamic movement in the future. The future of Islam is most visible in Iran, where there is a move toward reformism and rejection of political Islam. In Jordan, there is a moderate visibility to predict that the country’s Islamic movement will continue its tradition of moderation and conservatism. In Egypt, the future of Islam is least visible. While extremism is on a decline, it is not clear the degree to which a leftist-conservative alliance will dominate the country’s cultural landscape.     

Rationalisation,charisma and accounting professionalisation: perspectives on the intra-professional conflict in Greece, 1993–2001

During the 1990s Greek auditors and branches of international accounting firms in Greece fought a veritable professional war over the jurisdiction of statutory auditing. This intra-professional conflict developed against a backdrop of profound changes in the socio-economic and political fabric of the country, along pro-liberal, free market lines. This paper looks at a particular episode of that conflict––an attempt by the indigenous auditors to regain the monopoly of practice they lost, following the `liberalisation' of the Greek auditing profession in 1992. The paper argues that Max Weber's theoretical work on history and social development can be applied in helping to understand complex processes of contemporary change in the accounting profession. The analysis of this case study posits that rationalisation and charisma play a major role in helping to effect historical change through their influence on class–status–party, the tripartite stratificatory structure of modern society. In these encounters, multifarious social, economic and political actors with overlapping or differing interests interact with one another. The end result is that historical development is read as a fluid process whose outcome appears uncertain, although certain trends may be discernible in the particular historical juncture examined in this case study.     

PERCEPTIONS OF EXTERNAL AUDITORS’ INDEPENDENCE: SOME CROSS-CULTURAL EVIDENCE

The objective of our paper is to contribute to the accounting education literature by demonstrating that there are significant differences among final year undergraduate accounting students in the United Kingdom, Australia, India, and Malaysia with respect to an important concept in auditing, namely, perceptions of external auditors’ independence. To attain this objective, we make an original contribution to accounting cross-cultural studies by operationalizing culture in terms ofindependent and interdependent construals of selfhood. These fundamental core cultural differences are important because they play a major role in regulating psychological processes including perceptions. Additionally, to gain insight into the evolving complexities associated with understanding culture in a global economy, the concept of acculturation is invoked in hypothesis formulation. We find support for the hypothesis that students from countries with greater political, economic and socio–cultural interactions (UK and Australia) are likely to have greater similarities (i.e., lesser variations) in their perceptions of external auditors’ independence, compared to students from countries that have less acculturation (other pairs of countries). The results have implications for improving learning and teaching of auditing in the four countries. Specifically, accounting educators may like to ensure that the meaning intended in the various national and international auditing pronouncements with respect to external auditors’ independence is effectively communicated to students within specific national cultural contexts. Our findings may also be useful to various international bodies whose objectives are to harmonize auditor education. The results also suggest that there is a need to critically question the assumptions made by professional accounting firms operating cross-nationally that it is possible to attain a single global set of audit procedures and codes of professional conduct.     

From inspection to auditing: Audit and markets as linked ecologies

This paper studies the roles that images and ideas of market creation played in the re-articulation of relations between government, audit expertise and professional organisation in post-Soviet Russia. It examines the change from state-led inspection to market-oriented auditing between 1985 and 2005, and analyses this in terms of the notion of “linked ecologies”. The paper queries the relationship between audit and neoliberal modes of governing. It argues that we should be careful not to see audit as an unproblematic expression of neoliberalism. Investigating the dynamics and conflicts accompanying attempts to establish auditing as a site for governmental reform, this paper examines the manifold ways in which the meaning of markets and the roles of auditing in them can be unsettled, reinvented and transformed. The paper analyses how auditing was made marketable, and investigates how projects of post-Soviet audit development came to be carried forward, shifted and changed through new “enterprising selves” and their newly founded audit and consulting firms. The paper concludes with a more general discussion of the implication of these findings for our understanding of the dynamics of professionalisation, and the changing of relations between politics and expertise.     

Self-employment rates and business size: the roles of occupational choice and credit market frictions

Self-employment rates and project size vary greatly across countries. The main message of this paper is that these broad regularities are consistent with an environment in which a common self-employment technology is available worldwide, but where (a) financial intermediation costs and (b) alternatives in “paid” work differ greatly. Our model indicates that alternatives in paid work are crucial for explaining self-employment rates, whereas high financial intermediation costs primarily affect the scale of projects. We also show that credit use is not informative for predicting either rates of self-employment or the scale of self-employment projects.     

Do higher value firms voluntarily disclose more information? Evidence from China

This paper examines the effect of guanxi on the relation between firm value and voluntary disclosure of information about new investment projects in China's institutional setting. We find a negative relation between firm value and voluntary disclosure for firms that rely heavily on guanxi in their value creation (e.g. non-high-tech firms, and firms located in regions with underdeveloped institutions). By contrast, for firms that rely less heavily on guanxi and more on other sources of core competencies (e.g. high-tech firms, and firms in high-marketisation regions), we find a positive relation between firm value and voluntary disclosure. The moderating role of guanxi on the relation between firm value and voluntary disclosure is explained by firms conscientiously balancing the costs and benefits of voluntary disclosure relative to guanxi. Specifically, high guanxi-dependence firms refrain from detailed voluntary disclosures for fear of revealing sensitive information that may harm their guanxi. In contrast, low guanxi-dependence firms rely more heavily on voluntary disclosures to reduce information asymmetry and financing cost, with such incentives being particularly strong for high value firms. Our evidence has implications for research on motives for disclosure and regulation of financial reporting.     

‘All sorts and conditions of men’: The social origins of the founders of the ICAEW

The early organisation of accountants in Scotland during the 1850s and 1860s has excited the intellectual curiosity and research endeavour of a number of students of professionalisation. By contrast, until recently there was a dearth of academic interest in institutional developments in England and Wales during the 1870s and 1880s. Yet, organisations such as the Institute of Chartered Accountants in England and Wales (ICAEW) which emanate from this period soon became the most significant players on the British professional scene and were to exert considerable influence on the development of accountancy institutions and professional ideologies in several locations. Exploiting a variety of genealogical sources this paper seeks to fill a void in the literature by analysing the social origins of the founding members of the principal professional association in England and Wales. It provides evidence of early chartered accountancy as a destination for long distance, upwardly mobile males, both intergenerationally and intragenerationally. The rate of self-recruitment among the founders of the ICAEW is shown to be low. The proportion of founders deriving from the upper and upper-middle classes is revealed to have been markedly less than that of their Scottish counterparts. The paper contributes to understandings of the complex professionalisation of British accountants, the extent of social mobility in Victorian Britain, the pathways to social advance in a class-based society, and illuminates the social complexion of one of the ‘new’ professions which emerged during the nineteenth century.     

The American balanced scorecard versus the French tableau de bord: the ideological dimension

Much attention is currently given to strategic measurement systems, the balanced scorecard being by far the most highly profiled among them. The balanced scorecard has not, however, received a particularly warm welcome in France, where the tableau de bord has been used for at least 50 years. This paper investigates the ideological assumptions of the two methods, the aim being to explain the differences between them and investigate the extent to which the ideological assumptions are coherent with the local ideologies of American and French society, respectively. The paper concludes that the main differences between the balanced scorecard and the tableau de bord may be explained in terms of ideological assumptions, which means that, to a large extent, these management tools are coherent with the local ideologies in the countries of origin. In addition, this analysis provides some insight into the more general question of the transferability of management methods and the appropriateness of globalising management theories.     

Reexamining the empirical relation between loan risk and collateral: The roles of collateral liquidity and types

This paper offers a possible explanation for the conflicting results in the literature concerning the empirical relation between collateral and loan risk. We posit that differences in collateral characteristics, such as liquidity, may be associated with the empirical dominance of different risk-collateral relations implied by economic theory. Using credit registry data and a novel identification strategy to control for borrower and lender selection effects allows us to differentiate between the ex ante and ex post theories of collateral. We find that collateral overall is associated with lower risk premiums and higher default rates. The results indicate an important role for collateral in mitigating losses and reducing risk-taking incentives, consistent with ex post theories. Liquid collateral is associated with especially low risk premiums, and these loans perform better than those with illiquid collateral or no collateral. We also find that individual collateral types exhibit significant variation in terms of risk-collateral relations, with some consistent with ex ante theories and others with ex post theories. Our results suggest that the conflicting results in the literature may occur because different samples may be dominated by different types of collateral with different economic characteristics.     

The measurement and management of human performance in seventeenth century English farming: The case of Henry Best

Agriculture is one of the oldest and most important forms of organised human activity Roberts [Roberts, J. M. (1988). The Pelican History of the World. London: Penguin, p. 49] but accounting historians have paid it relatively little attention when investigating the measurement and management of human performance. Undertaking a detailed analysis of the records of Henry Best, a seventeenth century English farmer, the current paper seeks to remedy this deficit. The current research finds that Best maintained financial records but notes that, in the absence of external accountability relationships and professional accounting, these records were not used for the calculation of financial performance or financial position but were employed simply to maintain track of transactions and to hold his workforce accountable for their performance. In drawing up a treatise on operational farm management for the benefit of his son and heir, who did subsequently employ this treatise, Best made extensive use of non-financial information. Best advocated that, when managing human performance, personal supervision should be guided by appropriate measurement systems: presaging later developments in scientific management, Best developed, inter alia, labour classifications, specified rates of pay, and required working methods and output levels. Like labour tasking on nineteenth century slave plantations, Best's methods may be perceived as “thematic precursor(s) to accounting-based disciplinary controls like standard costs and a transitory element from pre-modern to modern control systems” Tyson [Tyson, T., et al. (2004). Theoretical perspectives on accounting for labor on slave plantations of the USA and British West Indies. Accounting Auditing & Accountability Journal, 17(5), p. 758].     

The corporatization of research in Australian higher education

The recent public policy trend emphasising markets and economic logic among public sector institutions, including universities, has led to the introduction of greater managerialism and formal demonstrations of efficiency and effectiveness. Such moves require a definition of inputs, outputs and outcomes as a means to rendering these activities visible and measurable.In Australian universities, recent changes to higher education policy (particularly research and science policy) have tightened control by Federal Government over academic professional activities and increased the drive to render professional activities calculable (simple, standardized) for the allocation of scarce resources. This paper focuses on the narrowing of definitions in two particular areas, namely, research publication and the funding of postgraduate research degree completions. The paper argues that such policy strategies reinforce selectivity of styles of research, types of research problems undertaken, and favour the research approaches of some disciplines over others (that is, “big" science over “small" science and science over humanities and social science). A further consequence is tighter central control over both higher education institutions and academic professionals. Academics experience a drive to define their activity as either teaching or research, as opposed to teaching and research. This policy drive leads to a narrowing of professional activity into discreet categories. A further consequence of this drive on the part of the Federal Government may be the definition of higher education institutions into one of three categories, as either “teaching" or “research" universities, with a third group predominately “teaching" but undertaking some “research". As with other performance-based funding mechanisms, this may lead to a significant re-allocation of resources and standing amongst Universities in Australia.     

The effort and risk-taking effects of budget-based contracts

We investigate how the budget levels embedded in budget-based contracts affect individual effort and risk-taking. We show that, from a wealth maximization perspective, a tradeoff exists between motivating effort and encouraging risk-taking. We illustrate an inverted-U relation between budget levels and effort. Budget levels and effort are positively correlated until budgets become very difficult, at which point individuals “give up.” We illustrate an opposing, U-shaped, relation between budget levels and risk-taking. Low budgets provide the flexibility to take greater risks, whereas high budgets induce individuals to “play it safe” to ensure budget attainment. Risky projects provide the greatest probability of reaching very high (stretch) budgets. We conduct a laboratory experiment to empirically test this economic proposition vis-à-vis extant psychology research. Consistent with security-potential/aspiration theory, we find that individuals are willing to sacrifice expected wealth to either meet the budget or increase their potential payoffs. Our results suggest that the effort-risk tradeoff is mitigated at low budget levels, thereby increasing firm welfare, but is exacerbated at high budget levels, reducing firm welfare. Collectively, our results highlight the importance of understanding how managerial accounting practices such as budgets affect the various determinants of performance and not just performance per se. Our results also help reconcile conflicting evidence regarding where budget difficulty levels should be set.